SPS by With Intelligence的动态

Sentiment among PE dealmakers rose in Q1, driven by increased macro clarity, better visibility into interest rates, and a resolving valuation gap. This optimism, coupled with greater financing availability, is expected to boost activity in the coming quarters. Notably, take-privates and carve-outs are on the rise, with US$92 billion in deals announced, highlighting opportunities despite recent public equity gains. Tech investment remains strong, but sectors like consumer and financials have seen increased interest. Sponsor-to-sponsor deals are also up amid an exit drought, with secondary exits accounting for 26% of Q1 activity. As traditional lenders reassert themselves, credit conditions are stabilizing, supporting a more active market. With expectations of stable or improving credit conditions and cautious underwriting, PE firms are poised for growth. How can PE firms further capitalize on these trends to maximize their investment strategies? #PE #investment #strategies

Dealmakers have always been the stars of private equity. They find and evaluate deals, use debt to stretch the value of the equity invested, and help offload companies at the right time — all to maximize profits. They're even part of the industry's former name: buyout funds. Private equity is the buying and selling of companies for a profit, using debt. There's a reason most of the industry's founding fathers were investment bankers first. #privateequity #portfolio #investments #cxos #stars #advisory #consulting #executivesearch https://lnkd.in/gQwvmyMi

Private equity firms are forecasting a substantial rise in UK deal activity in 2025, with 84% expecting to execute between five and ten deals, according to a report by Reuters citing a survey by Deutsche Numis published on Tuesday. This represents a significant shift from last year, when only 12% of private equity firms reported they were “highly likely” to pursue bolt-on acquisitions for existing portfolio companies. Deutsche Numis surveyed 200 senior private equity executives, who expressed growing interest in public-to-private transactions, with 26% of respondents identifying public assets as their primary pipeline focus – a notable increase from just 14% in 2023. Firms are also signalling a readiness for larger-scale acquisitions, moving away from the smaller bolt-on deals that dominated in recent years. This optimistic outlook follows a rebound in UK dealmaking, spurred by stabilising interest rates, which have eased financing conditions for buyouts. So far in 2024, M&A activity in the UK has risen by 28.3%, with strong interest in the financial, industrial, and consumer sectors, according to data from LSEG. Despite these positive expectations, two-thirds of survey respondents described the UK debt market as “challenging” or “significantly challenging,” although this is an improvement from 2023, when 73% expressed similar concerns. Regulatory risks have also emerged as a major consideration, with firms wary of potential interventions from the UK’s Competition and Markets Authority, which they view as increasingly proactive. Source: Private Equity Wire

Insightful piece by Alex Nicoll for Business Insider, featuring Kevin Desai at PwC: "This leaves the industry with two options, Desai said: reduce debt or 'do something different to generate outsized cash returns.' Since private equity relies on debt to boost returns, the first option is off the table. What's left over is the new model that Desai calls private equity 3.0, which forces buyout companies to build new revenue streams to generate investor returns." Unlike traditional PE firms, Mauloa, has been thriving with the "private equity 3.0" approach since our inception in 2007 because we don't use debt or take control. Instead, we work alongside great business owners to grow revenue and increase profitability over the long-term, like we've done most recently with Kevin OConnor and O'Connor Plumbing. https://lnkd.in/gQwvmyMi

FT says: For the third year in a row, private equity distributions?were about half?of what investors expected. Heading into 2024, many dealmakers were optimistic about a significant drop in interest rates that would support a boom in deals. Spoiler alert: it didn’t happen. Now the pressure’s really on. If 2025 doesn’t come with the long-awaited reopening of public listings and M&A, returns for recent vintages could worsen. The industry has leaned on short-term fixes, such as continuation funds, which represented 14 per cent of private equity exits last year, or so-called net asset value loans. But the power of short-term solutions could wane. The clock is also ticking on private equity deals from 2020 and 2021; DD assumes many sponsors and limited partners aren’t having fun as these deals’ debt maturities approach in the coming years. Many deals in that era were done at overly optimistic valuations and are behind schedule on deleveraging. These deals will need to get on track. Otherwise, creditors might want to brace for painful restructurings. https://lnkd.in/enSa2TQj

The recovery in private equity (PE) transaction markets continued into Q3, with 135 significant deals announced globally, matching Q2 figures. Although deal values slightly declined, the past six months marked the most active period for PE since market volatility began over two years ago. Year-to-date, PE activity has risen by 36% in value and 18% in volume compared to 2023, indicating improved sentiment and narrowing valuation disconnects that allow more transactions to succeed. https://lnkd.in/gDFsEWHH

The trend in leverage during a deal's life can vary depending on various factors such as market conditions, industry dynamics, and the specific characteristics of the deal. However, some general trends can be observed: Initial leverage: #Private equity firms typically employ a higher level of leverage at the beginning of a deal to finance the #acquisition of the target company. #Deleveraging: After the acquisition, private equity firms may focus on reducing the debt levels of the target company over time to improve its financial stability and reduce financial risk. #Refinancing: As the target company grows and improves its financial performance, private equity firms may take advantage of favorable market conditions to refinance the existing debt at lower interest rates or extend the maturity dates. #Add-on acquisitions: Private equity firms may use debt financing to fund add-on acquisitions by the portfolio company, which can lead to an increase in the leverage ratio. Exit stage: Prior to exiting the investment, private equity firms may optimize the capital structure of the portfolio company by refinancing the debt, reducing leverage, or implementing other financial strategies to enhance the company's value and attractiveness to potential buyers. It is important to note that the trend in leverage ratios can vary significantly depending on the specific circumstances of each deal and the strategies employed by private equity firms. Additionally, market conditions and economic factors can also influence the leverage ratios throughout the life of a deal.

As always #investors: caveat emptor! (Buyer beware) "Early-stage companies often rely on Simple Agreements for Future Equity (SAFEs) and convertible promissory notes to raise capital either prior to a company's first priced preferred equity round, or to raise bridge capital between priced equity raises.?In addition to the economic terms, investors considering participation in these financings should seek visibility as to the other investors in the round, and the potential misalignment of incentives among those investors.?"

What do you do when the #privateequity formula no longer works? If both the debt and the company you're buying are too expensive to flip for a gain, how do you put your client's money to work? And if you can't invest their money, how will you give them the return you've promised, with your tidy 20% of profits taken off the top? Macroeconomic conditions have crimped private equity's style, and dealmaking has slowed. Now, attention turns to the portfolio operations team. Once considered just the steward of a deal between purchase and sale, they're now an essential part of creating value for firms' investments. While they are unlikely to take the place of dealmakers in the industry's hierarchy, they are the rising stars of a new era of private equity, private equity 3.0 says Kevin Desai of PwC. Kevin walked me through how the industry is changing, and why portfolio operations have become more important than ever in my latest for Business Insider https://lnkd.in/e5QNGXus